In fact, on Saturday April 4, I spoke at a conference in Orlando and the crux of my presentation was why buy and hold isn’t the way to go anymore.

After my presentation, one of the attendees asked me why I felt buy and hold was dead.  What has happened in the market that caused the long-held belief that buying and holding a stock or the market forever is not the way to invest?

Where do I start?

With the help of my colleague Christian Hill, we went back to 1950 and looked at the S&P 500 over the last six decades.  Here are the returns per decade.

As I looked at these results, I started thinking about how different the market is now compared to the 1950s.  How many people do you think were actively investing in the market in the ‘50s and ‘60s?  Not too many I would guess.  Maybe four or five million at best.  People may have had money in pension plans and the like, but the funds were being managed by a professional investment manager.

In the ‘70s and ‘80s we saw tremendous growth in Individual Retirement Accounts and mutual funds.  This made it easier for the average Joe to get involved in the market.  In the ‘90s, we saw two things greatly impact investment growth- 401(k)s and the internet.

Look at how the ‘90s were the biggest growth decade for the S&P 500.  Do you think that is a coincidence?

By 2005, there were 436,207 plans, 44.4 million participants and $2.4 trillion in assets in 401k plans.  Do you think the growth in participants and growth in assets had anything to do with the tremendous growth in the market during the ‘90s?  You bet it did.

Take a look at the 20-year periods.

Look at the tremendous growth in the last 20-year periods.  I also decided to break it down into two periods, the first 30 years without 401(k) plans and the 20 years since 401(k) plans were introduced.  From 1955-1985, the S&P went up 350%.  This is an impressive number, but from 1985-2005, the S&P jumped 632%.

The second thing that happened in the ‘90s was the onslaught of the internet and internet brokerage firms.  Instead of having to have an account with Merrill Lynch, Shearson or Paine Webber, individual investors could open an account with any number of online brokerages and pay one-tenth the commissions charged by the mainstream brokers.

I am not saying whether I think 401(k)s and online brokerage firms have been good for the overall market.  But what I do know is that these two creations have had a profound impact on how you have to view the market.

They have created easier access to the market and created more involvement from more people.  Unfortunately, they did not come with more education about the markets.  This is why I think traditional views on investing have been changed forever.

God help us if the plan to allow self-directed Social Security ever comes to fruition.

Source:  How Has The Market Changed Over The Last 60 Years?

• Sources close to the matter told Bloomberg News that President-elect Barack Obama may name Steven Rattner as “car czar,” a top-level position that would oversee the conditions of which bailout money is given to U.S. auto companies, Bloomberg reported. Rattner co-founded private-equity firm Quadrangle Group LLC in 2000.

• Barclays plc is planning to cut more than 2,100 jobs from its investment banking and investment management units, sources told Reuters. About 1,300 jobs would be lost from Barclays Capital. About 500 from Barclays Wealth. And about 370 from Barclays Global Investors.

• Great Britain energy titan, BG Group plc, plans to invest between $4 billion and $5 billion to develop oil fields in Brazil through 2012. “We’re confident that these developments can be made economic at lower oil prices, but we’ll need to ensure the efficiency of the investment. Oil prices we see today are much more realistic,” Chief Executive Officer Frank Chapman told Bloomberg.

• Pharmaceutical giant Pfizer Inc. (PFE) said it plans to slash 800 research jobs, a reduction of 5% to 8% of its research workforce. Most of the cuts will come from labs in California, Connecticut and England, and are in addition to the near 10,000 jobs cut companywide since early 2007, Reuters reported.

• Crude futures halted a weeklong price slide yesterday (Tuesday), as light, sweet crude for February delivery rose 19 cents to settle at $37.78 a barrel on the New York Mercantile Exchange. Futures briefly touched $36.10 a barrel, a new low for the year, earlier in the day.

• Commercial banks borrowed more while investment banks borrowed less from the U.S. Federal Reserve’s emergency lending program over the most recent week. The Fed report said commercial banks averaged daily borrowing of $87.9 billion during the week that ended last Wednesday. That was an increase from the $86.6 billion in average daily borrowing for the week that ended Dec. 31. Investment firms borrowed nearly $36 billion over the past week, USA Today reported. That was down from the average of $38.5 billion for the week that ended Dec. 31, the newspaper reported.

• U.S. companies may have to contribute $109 billion to their corporate pension plans this year to fill funding gaps caused by turmoil in the financial markets, consulting firm Watson Wyatt Worldwide Inc. (WW) said yesterday (Tuesday). Watson Wyatt expects companies also will have to contribute more than $102 billion in 2010. Both of these figures are up significantly from the $38 billion that companies were required to contribute to the plans last year.

Source: Global Investment News Roundup Wednesday, January 14th, 2009

This from The Sovereign Society:

I urge you to pay close attention because this development could impact your future retirement more than anything I have encountered in the last 20 years.

The government has already turned your banker into a federal agent who can confiscate your assets without warning or cause.

This is why you MUST consider getting at least part of your retirement assets out of the country while you still have the opportunity. Very soon it may be too late.

If you’ve read my articles over the years, you know I’m not a wily reactionary. Nor do I try to scare my readers with my articles. But honestly, today I need to raise a red flag because frankly, this is serious.

I’m more concerned about the markets now than I have been at any other time in my 20 years in the business. And whether you agree that this could be the perfect financial storm or not, it’s time to acknowledge the steps our government is taking to deal with this mess.

Right now, they’re wracking their brains to come up with short-term solutions for this mess. But long-term, the consequences of their actions could have a very serious impact on your retirement savings.

Devil in the Details of Paulson’s Plan

As the saying goes ‘the devil is in the details.’ Well, nothing could be truer for Paulson’s new TARP bailout plan. The following text is buried deep within the bill passed recently by congress:

NECESSARY ACTIONS. -The Secretary is authorized to take such actions, as the Secretary deems necessary to carry out the authorities in this Act, including, without limitation, the following:

Designating financial institutions as financial agents of the Federal Government, and such institutions shall perform all such reasonable duties related to this Act as financial agents of the Federal Government as may be required.

Broad sweeping authority to do whatever they want to do! “Financial agents of the Federal Government,” what does this mean to you and your retirement plan? Well here are a few potential scenarios…

Let’s say foreigners stop buying treasury bonds because they become even more nervous about the uncertainty in our banking system. Face it, we can’t survive without foreigners continually buying up treasuries. If suddenly they stopped buying, the government would have to do something to finance the debt.

Panic Scenario # 1 – The government tells your banker to purchase U.S. Treasuries with 50% of your retirement plan, or worse. (How about 100%?)

But that doesn’t work as well as they want, so they have to figure something else out…

Panic Scenario #2 – The government tells your banker to stop any transfers outside of the U.S., No more offshore accounts! (Highly likely during an Obama presidency.)

Things continue to go downhill and they become even more and more desperate…

Panic Scenario #3 – The government tells your banker to confiscate all gold in retirement plans for the good of the country! (This has already occurred once in American history.)

And finally the “Nuclear Option” we get a president who decides the right thing to do is ‘redistribute’ the wealth…

Panic Scenario #4 (worst case!) – The government tells your banker to confiscate all retirement plans over US$250,000 so we can redistribute the wealth! (But don’t worry we are going to have universal health care and they will take care of us so you don’t need it anyway.)

With a stroke of the legislative pen and passage of the bailout bill, all these nightmare scenarios could be very real possibilities. As government agents, the banks (including yours) will have no means to protect your interests against aggressive ‘redistribution’ or the bold new plans of a welfare state.

As a result, this could be one of the last opportunities you ever get to take urgent action now; before your retirement plan is in jeopardy.

How to Take Your Plan Offshore

There are basically two types of retirement plans, Qualified and Non-Qualified. Non-Qualified include IRAs, SEPs and Keogh’s. Qualified plans cover all of the rest and are handled in a slightly different manner.

IRAs require a U.S. Custodian, so this becomes your biggest challenge. There are very few custodians who allow you to totally self-direct your account including using non-U.S. investments and taking it offshore.

If you want to take your IRA or pension plan offshore you must use a totally flexible self-directed custodian who will allow you to take your account offshore. To find out whether they can help, just ask them - “Can I take my plan offshore?”

So how do you take your plan offshore? The following methods are allowed: A direct purchase of non-U.S. real estate, a foreign bank account, a non-U.S. annuity, a foreign corporation or in some cases even direct investment into a non-US investment.

There are a couple of other custodians who will allow you to use one or more of these options, but I am only aware of one company who allows all of them. This may be important if you want to use several different methods of transfer, or if you want to make multiple kinds of investments through one custodian to keep things simple.

Qualified Plans require a U.S.-based administrator and demand “the indicia of ownership” remain within the United States. These plans are simpler in some cases and more complex in others to deal with than an IRA. I have reviewed hundreds of plans and the language within the plan is critical, as well as your plan administrator.

In my last article for the A-Letter I mentioned a client whose administrator told them they couldn’t invest in property offshore despite the rules laid out in the plan’s language. After a good deal of back and forth on my part with the trustee and record keeper, I was finally able to convince them to allow the investment.

How to Configure Your Offshore Retirement Plan

In both cases, you want to have a foreign bank account in your retirement plan if it is allowed. I am currently aware of three banks, which allow Americans to open retirement accounts with them. You would work with your banker in developing an investment strategy using their expertise and services.

The bottom line is that you need someone qualified to review your plan document and to assist you in structuring the investment in a compliant manner.

Timing doesn’t allow me to discuss in much greater detail the specifics of taking your plan offshore. For now you need to be aware that you can do this regardless of what you have been told. And I am more convinced than ever that there isn’t much time left to take advantage of this incredible opportunity.

Source: Your Banker Has Been Turned Into a Federal Agent With Potentially Devastating Consequences!

This from the Guardian (UK):

Investors should start seeing the effect on year-end balance sheets, and reforms under the Pension Protection Act of 2006 are likely to complicate matters by forcing companies to spend cash to shore up their plans.

“If your pension plan was invested mainly in equities and equities are off 20 percent, all of a sudden you have a 20 percent shortfall,” William Hernandez, chief financial officer of paint maker PPG Industries Inc , told Reuters in an interview earlier this month.

“It is going to force a huge number of companies into making large contributions next year, at the worst possible time,” he added.

Companies in the Standard & Poor’s 500 index <.SPX> are on their way to record underfunded status and few plans are expected to turn a profit this year, S&P’s senior index analyst Howard Silverblatt said in a note to clients last week.